| The major indices saw little change in a week when the action shifted to the slightly smaller stocks. The Nifty was up a nominal 0.2 per cent at 4518 while the Defty was ahead by 0.68 per cent as the rupee strengthened again. |
| The Sensex was up by a similarly nominal amount and closed at 15603. The Nifty Junior was however, ahead by 1.29 per cent beating the bigger indices. |
| Breadth weakened towards the end of the week. The CNX IT lost a massive 4.6 per cent and that was a major cause of the drag on the big indices. The Bank Nifty was up 1.01 per cent. |
| Both FIIs and domestic mutuals were net buyers until Thursday. The FIIs sold on Thursday and anecdotal evidence suggests that they also sold on Friday though concrete data is not yet available. Volumes were okay and rose on Friday during the selloff. |
| Outlook: The market is range-trading. The eventual breakout is somewhat more likely to be upwards but it's almost a 50:50 guess. There's support at 4450 and resistance above 4550. A close beyond either of these levels would project to a 100-point move. |
| Rationale: We've seen several sessions of consolidation in a narrow range between 4450-4550. Clearly, there needs to be a trigger for a breakout. |
| The intermediate trend has now been bullish for over three weeks. If it remains bullish, the breakout is more likely to be upwards and culminate in a new all-time high. |
| On the downside, a breakout below support at 4450 would probably result in a bounce from support between 4350-4375. |
| Counter-view: If the pattern on Friday's session is indicative, there could be heavy selling when the market opens. FII attitude will be crucial. It will be negative if the global credit situation remains unclear. |
| Bulls & bears: There was across the board selling pressure on IT stocks through the week but both buying and selling was scattered across other sectors. |
| Quite a few banks and financial service providers did well with HDFC, HDFC Bank, IFCI, Indian Infoline, Reliance Capital, ICICI and Corporation Bank all looking capable of further bullishness. |
| Cement shares did well until Friday when there was a lot of selling. Reliance Industries continued to hit new highs while there was obvious interest in RIIL and IPCL. Unitech saw buying as did DLF. |
| MICRO TECHNICALS |
| HDFC Bank Current Price: 1232.7 Target Price: 1310 (long-term) |
| The stock has seen volume expansion while developing a promising formation. It faces serious resistance between 1240-1250. |
| However if it closes above 1250, there will be a target of 1310. Keep a stop at 1225 and accumulate a deliver position with a timeframe of about four-five weeks. |
| India Infoline Current Price: 842.3 Target Price: 970 |
| A strong uptrend has also been supported by excellent volumes. India Infoline is now trading very close to its all-time highs. It has a short-term target of 970 and a possible long-term target of 1100. Keep a stop at 800 and go long. Consider delivery with a six-week perspective. |
| Rolta Current Price: 446.25 Target Price: 420 |
| A sharp rally has been followed by an even bigger sell-off. Any important resistance was broken at 450 on high volume. |
| There is a likely downside target of 420, which is a strong support that's likely to be tested on intra-day basis at least. Keep a stop at 452 and go short. Cover below 425. |
| Reliance Industrial Infrastructure Current Price: 599.6 Target Price: 700 |
| The stock has seen a single-session jump from 511 on a huge volume expansion. This completes a promising chart formation and projects to a possible target at 700. Keep a stop at 585 and go long. Move the stop up 15 points for every 15 point rise. |
| Unitech Current Price: 282.9 Target Price: NA |
| The stock has split very recently and it's due to be added to the Nifty. While both are positive developments, they also make target projections impossible. |
| Keep a stop at 265 and go long. Book partial profits above 295 and hold the rest for delivery with a three-week timeframe. |
| (The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.) |
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